I haven't done this personally, but when I was there I was staying at the pink palace. I met a guy who was camping out in some caves north of the hostel.
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GinaminOct 12 '11 at 1:05

I'm now on mainland Greece and I've noticed people camping in vans at beaches even though they have no camping signs. I guess nobody minds if it's just for a night and it's out of season. The campground I passed didn't seem to be open anyway so I also camped at a lake beach just in my sleeping bag and had no problem. Maybe Corfu not very different.
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hippietrailOct 12 '11 at 8:48

A lot of laws (and taxes) are not kept to in Greece by the locals, however they will not tell you the ones you have to keep to!
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Ian RingroseNov 10 '11 at 17:12

As an additional hint, I read in my message boards that one night shouldn't be a problem, but you should not stay more than one night in the same place. And if there is an official campsite just next to your free camping place, you will probably get more problems than in more remote areas.